Council's utilities committee chairman is hesitant about the increase request.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- Youngstown Thermal has been playing catch-up with its rates the past couple years after a 12-year freeze.
Spiking natural gas prices, however, have thrown the company for a loss. That's why Thermal is asking city council for a 9 percent boost instead of a third consecutive, 5 percent rate increase.
"It jumped our costs last year just like everybody else," said Carl E. Avers, chairman of Youngstown Thermal. "The harsh reality of the marketplace."
Thermal provides steam heating and cooling to many downtown buildings. Council oversees the steam company's rates.
Gas prices have increased 115 percent since February 1999, Avers said.
Thermal burns mostly coal to produce the steam. The portion of natural gas its plant uses, however, still raised costs dramatically, he said. That, combined with rising gasoline and wage costs, led to the 9 percent request.
Without the gas price spike, Thermal would have limited its request to another 5 percent, Avers said. Council has granted the company such increases each of the past two years. No customers have registered opposition to council.
Gradual increases: Thermal absorbed rising costs over the previous 12 years. The company told the city a few years ago that it would rather increase rates slowly than seek one big jump and possibly lose customers.
Rate increases are needed even as Thermal tries to bring in more revenue by expanding services and cutting costs, Avers said.
Five customers were added when Thermal extended chilled water service for cooling. The company also cut expenses by installing a turbine generator to produce electricity. Thermal can sell electricity when prices are higher and can keep operating its plant if Ohio Edison's service goes down.
The company can't absorb the recent natural gas price increase or other rising costs, Avers said. Prices here are still low, comparatively, he said. In Cleveland, average rates are about 50 percent higher.
"I think people realize energy is very volatile," Avers said. "We can't take the full risk."
Ron Sefcik, D-4th, chairman of council's utilities committee, is hesitant.
He wants to see Thermal's financial statements and hear from customers. Natural gas prices seem to have stabilized, Sefcik said, and he wonders why the large increase is needed.
Last year, the committee spent extra time evaluating the request and extended the time for customers to give their views. None did, and council approved the increase in November.
Thermal hopes to have the new increase approved by Nov. 1.
The request was made earlier than in past years, as council had asked. Council said last year it wanted Thermal to make any request in the summer, rather than waiting until fall and getting close to the heating season.